Sacramento daily record-union. [volume] (Sacramento [Calif.]) 1875-1891, 1887-11-05
THE RAILROAD DEBT TO THE Gov
EMINENT.
Is. F. Alta. November sl.l

the Central and Union Pacific Railroad
will begin 10 mature, and before that time
arrives the Government ought to deter
mine definitely what course it Will pursue
with respect to requiring payment by the
companies of the debt represented by those
bonds. Shall it pursue the role Of harsh
and exacting creditor, and rigidly insist
upon payment of every dollar of principal
and interest at maturity? Or shall it
adopt a more generous policy and either
forgive the debt entirely, or provide for its
gradual payment, upon easy terms, by
services to the Government or the like !?
To reach a Just and wise conclusion upon
this point requires careful consideration
of the history Of the debt, of the circum-
stances attending the issuance of the bonds.
and of the understanding, express or i'm
piled, upon which they were issued.
We propose, therefore, in series of ar
ticles, Of which this is the first, to discuss
this subject chiefly from historical point
of view, and to show, from the Congress
sional debates on the bills authorizing the
bonds, and from other undoubted and un-
dei.iable facts, that to exact from the com
panIes absolute payment, at all events, of
those bonds when due, would be contrary
to the expectations and intentions of the
country at the time of their issuance, and
that generous policy in dealing with this
question is the only Just policy We pro-
pose to show that it was generally under
stood when the Acts providing for the
bonds were passed, that the corporations
were to pay them only in transportation
services to the Government and in the five
per cent. of net earnings stipulated for in
those Acts. We propose to show that in
fact the companies have already more than
paid the bonds in the saving to the Gov
ernment upon transportation which they
have effected.
This is question of vital consequence
to the people of California, especially so far
as the Central Pacific Company's proper
ton of that debt is concerned. They have
an immediate, personal, financial interest
in it. If the Central Pacific Company is
required to pay that debt, or its proportion
of 1t, 1t must get the money out of its
traffic to reimburse it. 1t will simply ad-
vance the money, and its patrons must paw
it finally, principal and interest, with
further interest to the company for the ad-
vance. To impose the debt upon the
company is to impose it upon those who
do business over the road. 1t is to increase
by that amount, with interest, to cost of
the service of the company to its CUSTOM
ers, without any corresponding increase or
Improvement of the service. 1t is to re-
quire that, for years to come, every immi-
grant to this coast who travels by that
road every passenger who goes or comes
by 1t; every pound of merchandise that it
brings to us, and every pound of our pro-
ducts that it carries away, shall pay toll to
discharge that debt.
Leaving the Union Pacific out of the
case entirely, to require the Central Pa
cific Company to pay its proportion of
those bonds will impose tax Of $4,000
600 or $50 100000 on the patrons of that
company's road. The Central Pacific
Company's proportion of the principal of
the bonds is, in round numbers, SIS, 00O,-
GOO, upon which the interest for thirty
years, at per cent will aggregate about
S50,O00,000. Deducting what has already
been paid iii Government transportation.
ETC., and allowing the company interest on
the advances necessary to pay the residue,
would bring the aggregate yet to be paid
by the patrons of the road, to discharge
that debt, up to S75,000,000, if not beyond.
The question as to whether or not this
stupendous impost shall be laid on the
traffic over the Central Pacific road to
say nothing of the Union Pacific, is GER
tainly one in which the people of the Pa
cific coast may be expected to take A very
warm interest. When it is remembered,
too, that the construction of that road was
a great national enterprise, and that it re
ceived national aid on that ground. the
attempt to reimburse the nation for S75.-
100000 or SS0,000,000 of that aid by i'm
posing it as burden upon the business OF
the patrons of the road, becomes still more
interesting. The people of California and
of other States and Territories served by
the road might well be pardoned for OBJ
posing any such invidious imposition, even
if that had been the declared intention
when the debt was contracted. But we
propose to show that nothing of the kind
was intended or expected.
Certain facts stand out prominently in
the Congressional debates of 1862 on the
Pacific Railroad bill, which utterly forbid
the supposition that absolute repayment
OF the money to be advanced by the Gov
eminent could have been designed or ex-
pected. Among these facts we may men,
ton: The admitted difficulty of the en-
terprise, the necessity of the most liberal
Government aid to carry it through. its
general distrust of the success of the road
as business undertaking. With respect
TO the difficulty of it, indeed. it is curl
Gus and interesting as we'll as in
structive, to observe how difficult i;
was regarded then from the view COM
monty taken of 1t now in some quarters.
There are now multitudes of village fnan-
clers and ward statesmen in every part OF
the country who never tire of assuring us
that the building of the first Pacific rail
road, with the aid which was given by the
Government, was the easiest possible un-
dertaking, and that anybody could have
done ii !"
How different was the feeling in 1862
both in and out of Congress. With what
appalling magnitude the enterprise then
loomed up before the eyes of the country
and how dubious seemed the prospect oil
success, even with the Government aid
provided for In the Act which was then
passed. No one whose opinion was worth
considering would have dreamed of slg-
costing that the aid promised was too lib
eral- The great fear was that the Govern
ment was too grudging, and that it was not
doing enough to enlist necessary pr;;
vate capital IN the work Except among
the enthusiastic California mem,
bers of Congress, and some
Others representing constituencies slono
the line Of the road and directly In,
terested in its success. the prevailing
opinion even among the friends 90
the measure, was that after the road
was &iilt it would not be pnafta.
bic to nun it, perhaps for many wears
And ne thorough friend of the entersris,
would kaye thought of insisting upou the
absolute payment without regard to che
prottabheness Of the enterprise or the an
comes OF payment. Any such requirement
it was generally understood, would defeat
the road; and that result it would have
no doubt accomplished.
Nor is il 50 he wondered at that leadiar
public men then regarded the building %
TINS road as such a stupendous undertak-
ing, requiring for its success the utmost lib
crafty in Government aid, or that they
gravely doubted the possibility e,f operat-
ing 1t profitably when eompleted without
still further aid. There ,xas no parallel
Tor such an enterprise in the history of
railroad construction of that time. To
build railroad eatirely across the CONT
hent, over mountains almost impossible,
through wilderness and dese,S. with no
possibility of local traffic to sustain it
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